Understanding Margin

Summary

• Liquidations occurs when the account equity falls below the maintenance margin.
• Initial margin is the max amount of leverage that can be used to open a position
• Maintenance margin is different for each asset and varies from 8-50x
• Maintenance margin is between 2% (for 50x max leverage assets) and 10% (for spot assets)
• Initial margin is between 5x for spot assets and 10x for perps
• These numbers are subject to change and likely to increase as the platform becomes more secure

Initial Margin

Initial Margin is the amount of margin you are able to initialize a trade with. It determines the maximum leverage you can use when opening a position.

Examples:

1. Spot Trading (5x leverage)

   • If you want to buy $1000 worth of BTC
   • With 5x leverage, you only need $200 as initial margin
   • Formula: Position Size / Leverage = Initial Margin Required
   • $1000 / 5 = $200 initial margin

2. Perpetual Futures (10x leverage)

   • If you want to open a $10,000 BTC-PERP position
   • With 10x leverage, you need $1,000 as initial margin
   • $10,000 / 10 = $1,000 initial margin

Maintenance Margin

Maintenance Margin is the minimum amount of equity required to keep a position open. If your account equity falls below this level, your position will be liquidated.

Examples:

1. High Leverage Asset (50x)

   • Position Size: $10,000
   • Maintenance Margin: 2% ($200)
   • If your equity falls below $200, position will be liquidated
   • This means you can lose up to $9,800 before liquidation

2. Spot Asset (10x)

   • Position Size: $1,000
   • Maintenance Margin: 10% ($100)
   • If your equity falls below $100, position will be liquidated
   • This means you can lose up to $900 of asset value before liquidation

Important Notes:

• Maintenance margin requirements vary by asset and market conditions
• It's crucial to monitor positions and maintain sufficient margin to avoid liquidation
• The platform may adjust margin requirements during periods of high volatility